Government to mull over separate COE category for private-hire cars: Chee Hong Tat

Singapore is not ruling out a separate Certificate of Entitlement (COE) category for cars owned by private-hire vehicle (PHV) fleet operators, said Acting Minister for Transport Chee Hong Tat.

The move has to be studied carefully, however, to avoid affecting the supply of COE for vehicles in other categories. If implemented, it would likely be timed separately from other regulatory changes in the point-to-point (P2P) transport sector, Chee said in an interview with Lianhe Zaobao (LHZB).

In recent years, the presence of commercially driven PHV fleet operators in the COE bidding pool is widely perceived to have pushed demand for vehicles higher, and in turn driven up COE prices.

Chee said in Parliament in November 2023 that private-hire cars are unlikely the main factor driving up COE prices, as they have been accounting for a lower share of COEs.

Regardless, the Land Transport Authority in September said it will review the structure and regulatory framework of Singapore's P2P transport sector, comprising taxis and ride-hail services.

The review will focus on the availability of P2P supply, the resilience of P2P services and the inclusivity of such transport services.

Chee, in the interview, said the review for the separate COE category will target PHVs owned by companies, and exclude those owned by individuals. The report did not mention when the review will be completed.

About three-quarters of newly registered private-hire cars are owned by companies, said the acting minister.

The rest are owned by individuals — these are generally for personal use, and only provide part-time private-hire services during peak hours or weekends, which sets them apart from purely commercial PHVs, he added.

According to LHZB, industry players have suggested that PHVs should be in the same category as taxis.

Taxis were removed from the COE bidding process in 2012. They instead draw from the pool of Open category COEs and pay the Category A prevailing quota premium — a moving average of COE prices in the preceding three months.

Chee noted that if PHVs were to have another special COE category like taxis, it would mean that some COE quota will have to be deducted from at least Categories A and B. Category A is for smaller, less powerful cars, while Category B is for larger, more powerful ones.

This is not a straightforward task, because the government would need to accurately gauge PHV demand in each bid, he said.

The acting minister said while the shrinking taxi fleet is putting less pressure on COE demand, demand for PHVs remains fluctuating due to changes in the market and operating environment.

If demand is wrongly estimated and COE quotas for PHVs are insufficient, there will not be enough private-hire cars to meet the demand for P2P services.

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But if the supply exceeds demand and too many COE quotas are deducted from Categories A and B, the supply of these categories will be further reduced and drive up COE prices, he added.

Shrinking taxi fleet resulting in less street-hail services

As at November 2023, the total number of PHVs hit 79,921, far exceeding the total number of 13,622 taxis.

Chee noted that taxi drivers are ageing, while many young drivers are choosing to drive PHVs instead of cabs. As the number of taxis continue to fall, this will decrease the number of street hail services they provide.

This may result in difficulty for some passengers — such as the elderly — who do not know how to call for taxis through ride-hailing apps, he said.

Asked by LHZB whether allowing PHVs to provide street-hail services would solve the problem, Chee said this would require careful study, especially now that the characteristics, service needs and operation methods of taxis and PHVs are all converging.

He said it is not possible to find a perfect consensus that satisfies everyone and solves all problems.

But the government is hoping to implement a new set of rules, structures and framework that can better respond to some of the most pressing needs and concerns, while also being more reflective of the evolving nature of the P2P industry and passenger demand.

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This article was first published in The Business Times.